What challenges do franchisors face?

By Sarah Stowe | 29 Oct 2015 View comments

What are the big challenges of franchising right now? 

Suzanne Jarzabkowska of DC Strategy says “Successful franchises understand that their profitability and the value of their brand is consolidated and protected by the highly prescriptive nature of their well-developed systems and processes, as well as a high degree of compliance by their franchisees."

Innovation keeps the best franchises ahead of their competitors because they know they will eventually be copied, she says. "Market leaders understand that differentiating their product and service experience and leveraging their brand’s USP consistently across their network is critical. This allies to every aspect of their business as it is often the invisible innovation related to staff training, more cost effective systems, direct customer communication, and leading technology that truly defends and extends market share."

Franchisors need to be flexible and responsive to the changing nature of business, to anticipate customer trends and track performance, she advises.

“Successful innovation leads to more correct decisions being made earlier, edging better franchisors even further ahead of competitors and retaining and continually re-engaging customers to ensure brand loyalty.

“For franchisors, finding the right recruits – franchisees that share your passion, vision and commitment, and are prepared to work hard – is a key to your success. Lead with your values, as values drive decisions from whom to hire to strategic business decisions.”

Warren Wilmot, CEO of 7-Eleven Australia, and the chair of the Franchise Council of Australia, suggests in a video interview that one of today's key challenges is for franchisors to face up to the challenge of why businesses become franchisors.

"What value do your franchisees bring to your business? I think there’s been a bit of a tendency to jump to franchising without a full understating of the improvement to the brand and improvement of financial pie for everyone by bringing franchisees in to it," he says.

Rather than adopting franchising as a route to "get a franchisee to be responsible for a few things we don’t want to be", Wilmot suggests considering how franchisees might actually act as entrepreneurs trying to grow their trade.

"A few franchise groups jump to it a bit fast, are not really sure what the proposition is for the franchisee."

  • Hear a more controversial view about the franchise relationship from Warren Wilmot in one of our favourite videos.
  • DC Strategy will be attending the Franchising & Business Opportunities Expo at Moore Park, Sydney, from 27 to 29 March, 2015.